A Libertarian view of the world is that government interferes with life too much. Also, that government regulation costs businesses so much money to remain legal that the business can’t make any money. On one hand, I agree. On the other hand, I say, you made this bed, now look at the fucking mess it is.
Here’s the thing. New laws and new regulations don’t just appear out of thin air. They are created in response to a case of abuse to prevent the abuse from happening in the future. That’s it. You look at every law and regulation and tell yourself, “That law exists to prevent someone from doing it.”
So now I’m in the process of refinancing my mortgage. The last time I dealt with a mortgage was when I bought my home, 11 years ago. You have heard the stories from that era, where you only needed a pulse to qualify for a mortgage. That’s not the case any more. So here’s what I have experienced with the new, modern, regulated mortgage industry.
I initially spoke to a “mortgage consultant” who took my information, ran my credit and locked me in on a mortgage term and interest rate. Then, I was handed off to a “mortgage processor”. This person was unable to do the tasks of the consultant, and isn’t actually involved with the mortgage approval process. They collect the documentation for the “mortgage underwriter”. One of the documents is the house appraisal. But the processor can’t call an appraiser directly. They place an order with a company who will dispatch an appraiser. After the documents are collected, they are submitted to someone in “pre-underwriting review” before they are submitted to the underwriter. The pre-underwriting team can request additional documents for the processor to collect.
So, after you get through the mortgage consultant stage, you are charged a pretty significant application fee, which also includes the appraisal fee. Then you have to fight your way through three boss levels to succeed in your goal of a mortgage. And each one is going to be pickier than the rest. I thought I was being proactive in providing a scan of the cleared check proving that I bought out my ex’s share of the property. Nope. That just raised red flags. “Where did you get that money from?” Are you fucking serious? That’s pretty much none of your business.
But you know what? It is their business. And you know why? Scammers. God damn scammers. Why would they ask that? Well, what if I cashed out equity in another property to cut that check? What if I cashed out my 401k for that money? To you and me, that doesn’t matter. It’s my money and I’ll use it however I want. It doesn’t matter if that money came from equity (it’s my money), a 401k (it’s my money), or from saving from my paycheck (it’s my goddamn money). But to them, the source of the money can be a liability. And actually, the money is nothing more than a reduction in my net worth, which is something that is very important to them. No bank wants an over-extended client struggling to pay his mortgage.
How did this come about? Because scammers. Because people scammed the system and got away with it. And now everyone has to suffer and prove that they are not a scammer, too. Because their actions resulted in a lot of regulation forcing a separation of concerns. There is absolutely no way for collusion in this structure. No one talks to the underwriter. No one talks to the appraiser. It’s like offering sacrifices to some pagan god and hoping for acceptance.